International Trade

This week, President Barack Obama signed into law a bill giving him trade promotion authority (TPA), intended to ease the passage of trade pacts with other countries by requiring lawmakers to vote simply yay or nay – no amendments allowed. During the signing ceremony, the president praised the measure because of all-too-unusual cooperation among Democrats and Republicans.

The China–Australia Free Trade Agreement (FTA), signed and made public on 17 June 2015, included investor-state dispute settlement (ISDS) provisions, which allow foreign investors to claim against host states that violate substantive commitments if the treaty’s inter-state arbitration mechanism is unavailable due to political or diplomatic reasons. ISDS is especially useful when the host state’s laws and procedures do not meet commonly accepted minimum international standards.

Last summer, a debate over the historically ho-hum Export-Import Bank of the United States (aka Ex-Im Bank) simmered over and went mainstream, as a growing chorus of Republicans and many companies demanded its dismantling.

Like many government agencies, the Ex-Im Bank – which provides financing for exports of American goods and services – requires reauthorization every so often. In addition, during the 2014 debate to do just that, some major US businesses petitioned Congress to terminate the bank, while others fought fiercely to preserve it.

The China-Australia free trade agreement is not just another FTA. In the coming decade, it will make a unique contribution to stability and prosperity in the Asia Pacific.

After almost a decade of talks, China and Australia recently signed a Free Trade Agreement (FTA). After more than 20 rounds of talks spanning across three governments and five prime ministers, the two key negotiators, China’s Commerce Minister Gao Hucheng and Australia’s Minister for Trade and Investment Andrew Robb, eventually inked the deal.

The doomsayers claim that the role of the dollar is being eclipsed by the rise of the Chinese yuan. Others see the demise of the dollar and some countries, like Iran and Russia, selling oil in other currencies than the greenback.

These all high profile developments, but they are not what they may seem. The yuan is still a relatively small currency, according to SWIFT. The transactions on SWIFT remain highly concentrated in dollars and euros.

Over the last several days, President Barack Obama pulled out all the stops to pass Trade Promotion Authority (TPA) – aka fast track –, which would restrict Congress to an up-or-down vote without amendments on trade deals for the next three years.

After the Senate’s refusal to pass trade promotion authority (TPA) on May 12, some trade advocates feared that President Obama’s ongoing commercial negotiations with Asia and Europe would die a slow death.

Yesterday’s narrow vote in the Senate to close debate on TPA – a key hurdle to final passage – promises to lift their spirits considerably, as it likely guarantees passage of the bill within the next few days, ahead of the Memorial Day recess.

Unless the Trans-Pacific Partnership (TPP) trade talks conclude soon, they risk dragging on interminably. If that happens, the United States’ capacity to function as a benign world hegemon will be diminished.

To avoid this, the White House is determined to get the pact signed and ratified by the end of 2015. This means persuading the US Congress to approve the Trade Promotion Authority (TPA) in June and its TPP negotiating partners to sign a deal just few weeks later.

Successful horse-trading got the US Senate closer to granting the President Trade Promotion Authority for the first time since 2002. Sixty votes needed to push the process to the next step and that is exactly what happened after a deal was worked out of the Export-Import Bank, whose authorization expires at the end of next month.